Upselling is a sales strategy that involves encouraging customers to buy a higher-end version of a product than what they originally intended to purchase.

Because acquiring new customers can be far more expensive than selling to existing ones, companies will often employ techniques like upselling to increase sales revenues. For example, a salesperson could show a customer the luxury model of a car side by side with the basic model or point out the benefits of an upgraded computer with a faster hard drive.

Upselling is often confused or used interchangeably with cross-selling, which is the practice of offering customers additional products to compliment an existing purchase. An example of cross-selling would be to recommend speakers to go with the computer, rather than an improved version of the computer itself. Both upselling and cross-selling are methods of increasing sales to existing customers, but use slightly different approaches in doing so.

Upselling can be a very useful sales tool for bringing in additional revenue from existing customers, but only if it’s done right. For upselling to work, a salesperson needs to:

Build the customer relationship and earn their trust

Identify their needs

Recommend the right product or service

1) Building Customer Trust and Loyalty

Upselling should function as a two-way street: customers gain added value in exchange for their loyalty and trust. Often, when people think of being upsold, they imagine a used car salesman trying to trick them into buying a sports car when all they needed was something practical. That is not how successful upselling works.

Instead, sales personnel should be working to build reciprocal relationships with customers and encourage long-term customer loyalty. To start with, this can be done by taking on the role of a consultant instead of a salesperson:

Know your product inside and out.

It’s important to be well informed about the product or service you are selling and prepared to help customers and offer individualised support as needed. If you are unable to answer questions or address individual issues, they could lose faith in your company or product.

Make suggestions based on customer preferences.

Customers can easily be alienated if they feel like they are being pushed to buy something that they don’t need. Instead, it should be clear that making the purchase provides them with a real added value.

Make customer service a priority.

Overall, a positive customer experience can be the deciding factor in whether or an offer is accepted, while indifference accounts for more than half of lost customers.

2) Get to Know Your Customers and Their Needs

Thorough knowledge of your clients is essential to upselling. Understanding customer wants, needs, and preferences increases their trust in your relationship. One way this is done is by listening to prospective buyers: often, customers will contact sales staff themselves and inquire about specific features and benefits – this is the exact information you want, being handed to you voluntarily. It can also be helpful for the sales team to have personal experience with the products and services they are selling. This will allow them to put themselves in the customers’ shoes and better anticipate customer needs.

As mentioned above, customers can start to lose interest if you offer them products and services that they don’t want or need. Making the right recommendations is key to successful upselling and should be done using the knowledge you’ve acquired about your client.

Understand the customer’s wants and needs.

Whatever you are upselling should somehow reflect the customer’s overall needs. While it may seem to be in the company’s best interest to make as many offers as possible, recommendations should be limited to avoid confusing or overwhelming the customer with too many options.

Upsell, don’t oversell.

Additionally, recommending upgrades that are too expensive in proportion to the original purchase could drive the customer away. The general rule of thumb is that an upsell should not increase the total price by more than 25%. Using available data from CRM and marketing automation, appropriate recommendations can be tailor made to best suit a customer’s needs.

In a nutshell, the ideal upsell customers are the ones who are most engaged with your products and services. The whole concept of upselling is based on growing relationships with existing customers, meaning that upselling inherently involves regularly following up with clients to asses their current status and needs. That can involve a variety of methods, such as:

Ask open-ended questions and listen to customers.

When they talk about their needs.

Consider whether a product or service exists on the market already.

If so, how can you improve upon it? If not, would it be possible to develop one?

Investigate whether there are ways to improve upon your own existing product.

If you already offer a satisfactory version, can you also provide an extraordinary version?

Analyse your revenue sources.

Seeing where your company earns the most can help to identify your clients’ needs and how to best upsell strategically.

Determine what your market segment can actually use and afford.

For example, if you are selling a software package to college students, you may not spot many opportunities to upsell them the business suite. On the other hand, you could potentially offer a student discount on a more comprehensive package.

Look at customer data across departments.

Customers have different contacts within a company depending on what they need. All of those contacts will have information about them.

Learn more about your customers through information available online.

Such as customer reviews, interactions over social media, page views, shares, etc.

Upselling should happen almost organically as a means of solving a problem or filling a need. Staying informed about what customers need from a variety of angles is the most effective way of identifying upselling opportunities.

Upselling opportunities can arise out of a wide variety of situations. Because of that, companies employ a wide variety of techniques to ensure customer satisfaction and maximise success. Some suggested techniques include:

Make sure you deliver what you promise.

Customer satisfaction is critical to upselling and fulfilling any promise you’ve made – whether it be writing an email or resolving a service issue – is a major part of that.

Communicate the value to everyone involved.

It’s easy to overlook stakeholders that aren’t your main contact. Even if you have communicated the value to some of the stakeholders, you should make sure that everyone on the client side is aware of the benefits that have been created for them.

Upselling is an effective sales strategy for increasing revenue while continuing to build relationships with clients. It should be a give and take scenario, in which customers gain added value in exchange for making a larger purchase or commitment to a company. For upselling to be successful, it is particularly important to know your customers well, earn and maintain their trust, and make appropriate recommendations. While there are a number of upselling techniques and ways to identify upselling opportunities, understanding the customer’s needs and experience is at the core of all of them.